Exorbitant profits! A team of 4 people earns 25 million yuan a year by engaging in this kind of unscrupulous business
A team of four earns 25 million yuan a year through unscrupulous business with exorbitant profits
“Cross-border e-commerce sellers are afraid of no patent infringement complaints.” Once a complaint is filed, it means that the account funds may be frozen. For sellers, the most fearsome thing is not losing their connections, but having their financial lifeline cut off.
Some Chinese people take advantage of this pain point of sellers and make a lot of money by filing complaints against Chinese sellers for infringement with patents they’ve obtained from foreign trademark and patent offices. Faced with the “hidden arrows” from their compatriots, Chinese sellers are in great distress, while these “patent trolls” have made a fortune from this lucrative business.
What’s even more terrifying is that training institutions have joined this chain of interests, continuously supplying this “patent trolling” to the industry, calling it “rights protection and compensation training.”
“Patent trolls” specifically target Chinese people, and a small company of 4 people earns 25 million yuan in annual revenue
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From a legal perspective, applying for a patent is to encourage more invention and creation and protect intellectual property rights, but it has been used by some people to make a lot of unjustified profits.
Recently, a netizen was shocked by the earning “ability” of these companies. He said that his friend was in the cross-border compensation business, applied for a patent in the United States, and sued cross-border sellers. The small company of four people has already earned more than 7 million yuan in less than half a year, and this year’s estimated revenue is as high as about 25 million yuan. Although he believes that the business of his friend is “a bit unrighteous,” facing this kind of huge profits that can be obtained with just a few patents and personnel costs, he can’t help but shout out, “I’m impressed, it really made me completely realize.”
It is said that cross-border e-commerce sellers can earn US dollars by selling overseas, and it is a profitable business with high profits, but compared with this kind of lucrative and unscrupulous business, it is nothing. If sellers want to make money, they need to conduct market research, select products for research and development, ship them, list them for sale, and do a lot of other things.
However, “patent trolls” directly suck blood from sellers.
Usually, they cooperate with rogue law firms abroad, with one party responsible for patent registration and the other for prosecution. Finally, they use the pretext of “infringement complaints” to demand “settlement fees”.
They are well aware that even if the seller can respond or invalidate the patent, they will ultimately choose to settle due to time and cost pressures.
It is worth mentioning that in order to prevent the complainant from asking for too much, sellers often find lawyers to negotiate on their behalf. However, it should be noted that these “so-called lawyers” may be in cahoots with the other party.
Their operation is to publicize the case information through certain channels, and then gather the defendants together and guide them to these “lawyers”. In this way, they not only get “settlement fees”, but also earn “lawyer fees”.
Leon and Toby are both sellers who have been deceived by patent trolls and have been in contact with Yien. Among them, Toby not only paid a large sum of settlement fees, but also had a large amount of inventory due to missing the sales season.
One infringement claim is not terrible, but what is terrible is that some people continue to “train” these people who gain profits improperly.
The organization offers “infringement claim” training courses for a fee of 19,800 yuan
An investigation by Yienet found that in addition to “patent trolls”, there are also institutions dedicated to training them. One of these institutions claims to offer a systematic course on patent infringement claims, consisting of 10 modules, with a price of 19,800 yuan.
They provide a process diagram for operating high-infringement patents based on US standards, as follows:
Select industry → select category → select product → find high anchor → refine selection → collaborate with institutions → apply for patent → search for infringement → lock in sales → sue for infringement
Moreover, the popular AI technology this year has provided them with a new selling point. It is reported that they will optimize and upgrade the application for high-anchor patents through the ChatGPT training model, and then extract and compare value information series manually to obtain the patent with the most infringement claim value.
Public information from the Chinese Anti-Infringement and Claim Alliance shows that in patent infringement lawsuits initiated by Chinese individuals or companies in the United States, there are always three institutions behind the plaintiff, namely Chromium ** Company, Han*** Law Firm, and Blue*** Company.
In addition, it also analyzed various types of patent claims in detail.
1. Registering US design patents. Registering design patents for domestic products in the United States. “Patent trolls” search for sellers who have been claimed in the comment section of online shopping platforms such as “e-commerce patent infringement”, and deceive them by pretending to be victims, obtaining the infringement reason and patent, and finally downloading the corresponding domestic patent file to apply for a design patent in the United States in advance. Currently, the hardest hit areas are pet supplies, sports equipment, and daily life products.
2. Registering patents. “Patent trolls” will ambush in the fan groups of bloggers who post on “industrial design” and “product design”. Once the owner of an enterprise publicly posts design information, they will register the product for a design patent in the United States.
3. Through mediation organizations, reverse engineer highly invasive patents. After the seller’s store is frozen, they often seek the help of a mediation organization. “Patent trolls” usually find these mediation organizations in advance, identify the patterns and characteristics of the infringing patents, and thus apply for highly invasive patents in reverse.
According to the chat records exposed, “patent trolls” make a lot of money. It’s easy to make five or six million a year, and they can achieve several small goals in two years. Initially, they would target cross-border e-commerce training companies by studying their selection strategies and social media dynamics to find anchoring products, make claims on patents, and then “snipe” the products of the training company’s students. One can imagine how many sellers will be scammed by this method.
Every time the “patent trolls” cause trouble, Amazon sellers are on the defendant list. In fact, such behavior also disrupts the normal operation order of the platform. Therefore, Amazon, which has always been criticized by sellers for its “one-size-fits-all” approach to infringement complaints, has also recently taken action.
Amazon takes action to rectify the situation, filing three lawsuits at once
According to reports, Amazon has recently launched three lawsuits against some groups, on the grounds that these groups have abused its delisting system and made thousands of illegal copyright complaints against other products.
In a statement, Amazon said that these lawsuits are part of a new offensive against bad actors.
Among these groups, the defendant registered under the name “Sidesk” had the most serious plot. The complaint alleges that the company used a “fraudulent” trademark to apply to enter Amazon’s brand registration program. However, although the US Patent and Trademark Office has canceled this trademark application, Sidesk still used it.
Interestingly, the trademark application was filed by Shenzhen Huanyi Intellectual Property Co., Ltd. It is well known that the company had previously been found by the US Patent and Trademark Office to have “submitted more than 15,800 trademark applications using false, fictitious, or fraudulent residence information and/or specimens.”
According to Amazon’s lawsuit, Sidesk has also made the most takedown requests so far, with approximately 3,850. The other two defendants, Dhuog and Vivcic, respectively submitted 229 and 59 in a matter of months.
Not only did they submit false complaints, but they also created disposable websites and scraped product images from Amazon in an attempt to use them as evidence that they were the legitimate copyright holders. This is like copying a picture and then using that picture as evidence to prove that the copied picture is infringing. It’s a bit ridiculous.
Amazon’s “takedown request system” obviously has a legitimate use, such as if someone tries to sell a shirt with Mickey Mouse on it, Disney will have the legal right to take it down because it owns the copyright to that character. The same goes for sellers.
But, as these cases show, it’s hard to walk the line between making it easier for legitimate claimants to take down infringing products and creating a system that bad actors can abuse.
Amazon says that, while it has a range of powerful protections to detect and prevent bad actors from attempting to submit false and abusive infringement notices, nothing is perfect.
If Amazon’s lawsuit is successful, it will serve as a deterrent to those who try to abuse its system.
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